Dell is known for its innovative model of customized production (Holzner, 2006). In this model, a customer provides specifications of the kind of computer he or she wants and then the company tailors or configures production as per the order.
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Therefore, there was no effort at standardization but rather building capacity to respond to customer desires, needs and interests (Holzner, 2006). The production process was informed by market dictates and individual customer preferences or desires.
Therefore, critical in the Dell design and supply model is being able to read customer needs and desires correctly (Holzner, 2006). Failure to capture customer needs or changing preferences and the model does not work.
To supply the computers, Dell unlike traditional distribution sought to eliminate all intermediaries thus being able to deal with the market directly (Holzner, 2006). To be able to deal with customers directly, production had to be decentralized thus; the company seeks to do the manufacturing close to the clients.
And given the products are customized to customer needs and preferences, for efficiency purposes, Dell has deployed just in time mode of production, which translates into lowering of costs related to storage or inventory management. This is very critical because it helps an organization to avoid all sorts of losses associated with parts breaking, depreciation and general wear and tear.
To deal with widespread customers and be able to configure products to their taste, Dell engages strategic partners (Holzner, 2006). While it does the general manufacturing process, the machine is configured within the proximity of the customer to take into account the needs of the individual customer.
The internet portal plays a critical role in enabling Dell deal directly with customers (Holzner, 2006). Further, through direct sales personnel or personal selling, Dell has been a model company in supply chain management.
Adoption of Dell Model in Auto-Industry
The auto-industry has largely been dominated by Fordism or Toyota model of production (Knights & Willmott, 2006). Fordism is anchored on traditional management theories or the scientific management theories advanced by Fredric Taylor, Henri Fayol and others(Knights & Willmott, 2006). Focus is on specialization, standardization, mass production and output based compensation (Knights & Willmott, 2006).
The Toyota model applied in auto industry employs the concept of batch production, which leads to more variations in models produced. If the auto industry were to take on the Dell Model, it would mean that focus becomes customization rather than standardization.
Secondly, the industry players would have to decentralize much of motor assembly and related configuration. Moreover, production would have to be backed by customer needs surveys rather than just producing a batch or producing massively and selling the new model of cars through aggressive marketing.
Additionally, the organizations would have to work towards eliminating as many intermediaries as possible to deal directly with customers. Like Dell, this would imply having to rely on information technology to get customer specifications and related feedback. Moreover, the auto-industry players would have to engage more of the direct sales approach to selling.
Through direct selling, the industry interacts at a more personal level with customers as opposed to receiving feedback from intermediaries. Where direct selling is not possible, then an auto-industry player is better placed instituting or engaging in strategic alliances or long-term agreements with few suppliers (Blanchard, 2007).
Long-term agreement with suppliers helps towards better control of the supply chain as opposed to encouraging competition within the supply chain.
When supplier compete in as much as it may increase efficiency, it may also compromise the organizations intent on dealing with customer needs and customizing products to their preferred specifications.
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A Flow Diagram Showing the New Supply Chain Model
Blanchard, D. (2007). Supply Chain Management: Best Practices. New Jersey: John Wiley and Sons
Holzner, S. (2006). How Dell Does It. New York: McGraw-Hill Professional
Knights, D. & Willmott, H. (2006). Introducing Organizational Behavior and Management. London: Cengage Learning EMEA